The Super Supply Company manufactures cleaning spray for public schools.During 2012,the company spent $600,000 on prime costs and $800,000 on conversion costs.Overhead is applied at a rate of 150% of direct labor costs.How much did the company allocate (apply)for manufacturing overhead during 2012?

Question

Quizplus · Accepted Answer

The manufacturing overhead is 150% of direct labor costs. Prime costs include direct materials and direct labor. If prime costs are $600,000 and conversion costs (direct labor + overhead) are $800,000, then direct labor is $320,000. Therefore, overhead is 150% of $320,000, which is $480,000.

The Super Supply Company Manufactures Cleaning Spray for Public Schools